Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead

by Laszlo Bock

The only reason your organization or places like GE have normal performance rating distributions is because HR and management force them to look that way. Companies have expected performance distributions, and raters are trained to hew to them. And that forces pay outcomes to follow the same distribution, which is completely out of line with the value actually created by people.

O’Boyle and Aguinis break it down: “Ten percent of productivity comes from the top percentile and 26% of output derives from the top 5% of workers.”

How many people would you trade for your very best performer? If the number is more than five, you’re probably underpaying your best person. And if it’s more than ten, you’re almost certainly underpaying.

To make these kinds of extreme rewards work, you need two capabilities. One is a very clear understanding of what impact is derived from the role in question (which requires a complementary awareness of how much is due to context: Did the market move in a lucky way? How much of this was a result of a team effort or the brand of the company? Is the achievement a short- or long-term win?). Once you can assess impact, you can look at your available budget and decide what the shape of your reward curve ought to be.

Celebrate accomplishment, not compensation

The error we made in our Founders’ Awards was that we were celebrating money, even though we didn’t mean to.

Compensation systems are based on imperfect information and administered by imperfect people.

John Thibaut and Laurens Walker, former professors at UNC–Chapel Hill and the University of Virginia, established the idea of procedural justice in their 1975 book Procedural Justice (though I’ll grant that they did little to advance the art of snappy book titles).185 Earlier, the literature maintained that if outcomes were just, people were happy. This was termed distributive justice, meaning that the end distribution of goods, awards, recognition, or whatnot was just. But that wasn’t true in reality. It’s like saying you care only about how much a salesman sells, not how they do it.

Kathryn Dekas, a PhD member of our PiLab, described the harm that this situation created: “Fairness perceptions are very powerful. They affect how people think about almost everything at work, but especially how valued they think they are, how satisfied they are with their jobs, how much they trust

People think about experiences and goods differently than about monetary awards. Cash is evaluated on a cognitive level. A cash award is valued by calculating how it compares to your current salary, or to what you could buy with it. Is it as big as a paycheck or smaller? Can it buy a cellphone or will it help me get a new car? And because money is fungible, as often as not it’s spent on staples rather than splurging on a pair of Christian Louboutin shoes or a massage, and fades from memory. Non-cash awards, whether they are experiences (a dinner for two) or gifts (a Nexus 7 tablet), trigger an emotional response. Recipients focus on the fact of what they get to experience, rather than calculating values.

But as Dan Gilbert explained in his terrific book Stumbling on Happiness, we’re not very good at predicting what will make us happy, or how happy it will make us.

The joy of money is fleeting, but memories last forever.187

Make it easy to spread the love

Simple, public recognition is one of the most effective and most underutilized management tools.

We’ve found that trusting people to do the right thing generally results in them doing the right thing.

Chris Argyris, professor emeritus at Harvard Business School, wrote a lovely article in 1977,191 in which he looked at the performance of Harvard Business School graduates ten years after graduation. By and large, they got stuck in middle management, when they had all hoped to become CEOs and captains of industry. What happened? Argyris found that when they inevitably hit a roadblock, their ability to learn collapsed:

Few people look back on their lives as a series of paychecks. They remember the conversations, lunches, and events with colleagues and friends. Celebrate success with actions, not dollars.

Google, of course, has a number of approaches, but the most salient one is the way we use our benefits and also our environment to increase the number of “moments of serendipity” that spark creativity.

David Radcliffe, our VP of Real Estate and Workplace Services, lays out our cafés and manages the lengths of lines so that there are “casual collisions” between people who might have interesting conversations. We dot our floors with microkitchens, pockets where you can grab a coffee, a piece of organic fruit, or a snack, and take a few minutes to relax. Often you’ll see Googlers chatting and comparing notes over a cookie and a chessboard or around a pool table. Sergey once said, “No one should be more than two hundred feet away from food,” but the real purpose of these microkitchens is to do the same thing Howard Schultz tried to create with Starbucks. Schultz saw the need for a “third place” beyond the home and office, where people could relax, refresh, and connect with one another. We try to do the same thing, by giving Googlers a place to meet up that looks and feels different from their desk. And we use the placement of these microkitchens to draw people from different groups together. Often they’ll sit at the border between two different teams, with the goal of having those people bump into one another.

Ronald Burt, a sociologist at the University of Chicago, has shown that innovation tends to occur in the structural holes between social groups. These could be the gaps between business functional units, teams that tend not to interact, or even the quiet person at the end of the conference table who never says anything. Burt has a delicious way of putting it: “People who stand near the holes in a social structure are at higher risk of having good ideas.”

Why would we care how many hours people work, if their output is good?

By now, you’d guess that this was a data-driven decision, based on a detailed analysis of Googler happiness, retention, and the costs of the program—the kind of decision I’ve been advising you to make. But, like the death benefits, we made this call based on instinct.

We believe we know ourselves, and that certainty is part of the problem. In his book Thinking, Fast and Slow, Daniel Kahneman, a Nobel Prize–winning professor emeritus of Princeton University, describes us as having two brains. One brain is slow, thoughtful, reflective, and data driven, and the other is fast, intuitive, and impulse driven. It’s the second brain we rely on most, which is why even when we think we’re being rational, we’re probably not.

When you buy clothes at a store, most salespeople hand you your purchase across the counter. High-end fashion retailer Nordstrom requires sales associates to walk out from behind the counter to hand you your purchase, which makes customers feel more personally cared for (and therefore more likely to keep shopping at Nordstrom). As a waiter, I used to squat down beside my guests’ tables to talk to them. My being at eye level instead of looming above them made them more comfortable, and earned me larger tips.

Complementary to what we saw in chapter 7—where professors Deci and Ryan saw intrinsic motivation and productivity drop once they started paying people to perform tasks—once you charge for something, people think about it differently. They want to “get their money’s worth.”

In their book Nudge, Richard Thaler and Cass Sunstein, professors at the University of Chicago and Harvard Law School, document at length how an awareness of the flaws in our brains can be used to improve our lives. They define a nudge as “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.… To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.”209

Scottish philosopher David Hume described this problem, referred to as the “is-ought” fallacy or as Hume’s Guillotine (because it severs the connection between “is” and “ought”). Just because something is done a certain way today, doesn’t mean it ought to be done that way.

Our people are smart but busy. It reduces cognitive load if we provide clear instructions rather than asking them to invent practices from scratch or internalize a new behavior, and this lowers the chance that an extra step might discourage them from taking action.

research that shows the simple act of making decisions degrades one’s ability to make further decisions.

Again, this doesn’t look like rocket science, does it? That’s because when you design for your users, you focus on what is the minimal, most elegant product required to achieve the desired outcome. If you want people to change behavior, you don’t give them a fifty-page academic paper or *ahem* a four-hundred-page book. So where is the rocket science? It lies in identifying the general class of attribute that causes superior performance—in this case, proactivity—which comes from closely studying what the two tails are doing differently. In isolating the specific cluster of behaviors that exemplify proactivity for all Googlers to emulate. In developing a way to transmit those behaviors to those who wouldn’t innately demonstrate them. And finally, in measuring the impact.

We’re borrowing a concept called poka-yoke or “mistake proofing.” It’s a Japanese manufacturing concept, applied by Shigeo Shingo in his work at Toyota in the 1960s,225 that shows up in many modern products. In most cars, failing to fasten your seatbelt causes an alarm to go off, signaling you that there is an error. The iPod Shuffle turns off automatically when you unplug your headphones, preserving the battery. A Cuisinart blender turns on only if the lid is securely locked, preserving your fingers. Similarly, we want to minimize the number of mistakes we make in getting Nooglers productive, and the best way is to put a reminder on both sides of the process.

Simply providing information wasn’t enough to change behavior.

In a series of studies, Professors Brian Wansink (Cornell University) and Koert van Ittersum (Georgia Tech) demonstrated that serving-dish size has a powerful impact on food consumption.242 They cleverly illustrated the issue by referencing the Delboeuf illusion, an invention of Belgian philosopher and mathematician Joseph Delboeuf in the late 1860s. The illusion looks like this:243

A system like ours, which relies on people to be good and provides benefit of the doubt, is susceptible to bad actors. My

Jonathan Rosenberg once told me, “A crisis is an opportunity to have impact. Drop everything and deal with the crisis.”

days: Innovation thrives on creativity and experimentation, but it also requires thoughtful pruning.

The key to balancing individual freedom with overall direction is to be transparent.

Not every problem can be resolved with data. Reasonable people can look at the same set of facts and disagree, particularly where values are concerned.

moments. Throughout this book I’ve tried to be honest about what has worked and what hasn’t at Google, but I’ve leaned toward what has worked because that’s a better roadmap for others.

The heart of this book is my belief that you can choose what type of organization you want to create, and I’ve shown you some of the tools to do so.

The “high-freedom” extreme is based on liberty, where employees are treated with dignity and given a voice in how the company evolves.

Both models can be very profitable, but this book presumes that the most talented people on the planet will want to be part of a freedom-driven company. And freedom-driven companies, because they benefit from the best insight and passion of all their employees, are more resilient and better sustain success. Tony Hsieh of Zappos, Reed Hastings of Netflix, Jim Goodnight of SAS Institute, and many others will gladly tell you about the business results that come from giving their people freedom,258 as the leaders of Wegmans and Brandix have. These technology companies have continued to see year after year of growth. Wegmans grows regardless of what happens in the economy, and continues to be a great place to work. What’s beautiful here is that treating your people well is both a means to an end and an end in itself.

you. As a manager, your job is to help your people find that meaning.

But it is an error ever to compromise on hiring quality.

What’s beautiful about this approach is that a great environment is a self-reinforcing one: All of these efforts support one another, and together create an organization that is creative, fun, hardworking, and highly productive.

I’d made an amateur mistake. Before Eric would entertain any esoteric ideas, People Operations had to deliver on Google’s most important issue. I learned that to have the privilege of working on the cool, futuristic stuff, you had to earn the confidence of the organization.

You rarely get praised for avoiding a problem.